Bond Market Update

Data Recon

• The Producer Price Index for final demand increased 0.5% month-over-month in January (Briefing.com consensus: 0.3%) following a downwardly revised 0.4% increase (from 0.5%) in December. The Producer Price Index for final demand, excluding food and energy, surged 0.8% month-over-month (Briefing.com consensus: 0.3%) following a 0.6% increase in December. The Producer Price Index for final demand was up 2.9% year-over-year, versus 3.0% in December, but the Producer Price Index for final demand, excluding food and energy, was up 3.6%, versus 3.3% in December.
  • The key takeaway from the report was rooted in the worrying core-PPI component, as that will foment concerns about pass-through to consumer prices that will likely keep the Fed leery about cutting rates soon.
• Yield Check:
  • 2-yr: -4 bps to 3.41%
  • 3-yr: -5 bps to 3.41%
  • 5-yr: -4 bps to 3.54%
  • 10-yr: -3 bps to 3.99%
  • 30-yr: -2 bps to 4.65%